Many readers will be familiar with the Spanish renewables saga which centers on changes made by Spain to a renewable energy support scheme in 2007, which led to over 50 investment treaty arbitrations, including a number brought by Japanese investors. The European Commission has now invoked state aid to justify the non-payment of the resulting awards against Spain.
The EU courts have long refused the enforcement of these Spanish awards where they are held by EU investors on the basis that arbitration provision in intra-EU investment treaties (i.e., treaties between EU member states) are incompatible with EU law. Essentially, the European Court of Justice (CJEU) has found that it was for the EU courts to decide questions of EU law that might arise in an investment treaty dispute between an EU state and an EU investor, which should not be left to arbitrators acting under investment treaties and outside the EU legal system. Hence, in the seminal Achmea case, they have found that arbitration agreements in intra-EU investment treaties, and any awards rendered thereon, are invalid.
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